Dollar Plunges Amid Skepticism Over US Treasury's Bond Buyback Gambit

The US dollar is experiencing a shaky week, with investors expressing skepticism about the Treasury's efforts to stabilize yields through bond buybacks.

U.S. Treasury Secretary Scott Bessent announced plans to double the size of these buybacks on longer-dated securities over the next quarter, but this move has failed to stem the selloff in U.S. Treasuries and weighed on the dollar.

The greenback is now on track for a weekly fall of more than 0.8%, with many investors concerned about the US government's growing debt pile and policy uncertainty.

Currency strategist Carol Kong at Commonwealth Bank of Australia noted that 'the Treasury's long bond buybacks are basically another example of the U.S. government using unconventional tools to manage borrowing costs, and this comes against the backdrop of high government debt, growing fiscal deficits and policy uncertainty.'

Goldman Sachs strategist Vitali Meschoulam added that 'our scepticism is not that policymakers lack the tools to influence the long end. History shows they do, at least temporarily. Our scepticism is that today's problem appears increasingly fiscal rather than technical.'